ING joins call for greater disclosure of climate risks and opportunities
21 April 2017
Leading up to the G20 Finance Ministers Spring Meetings of the World Bank Group and the International Monetary Fund that start today in Washington, the WEF Climate Leaders Alliance (of which ING is a member) urges G20 governments to formally accept the Recommendations on Climate-related Financial Disclosure (TCFD) as set by the Financial Stability Board (FSB) Taskforce.
Timely implementation of the TCFD recommendations is an important step towards delivering the commitments of the Paris Agreement and keeping global warming to well below 2°C. Companies should be encouraged to provide more transparency regarding the financial implications of climate change on their short- and long-term strategies and operations. This will incentivise a shift of investment to low-carbon and climate-smart opportunities and improve disclosure of the material financial risks companies face from climate change.
Climate change is an unparalleled challenge for our world, one where banks also have a role to play, as we stated in our climate statement back in 2016. ING has been climate neutral since 2007, but it’s not enough to only look inwards – we know that our biggest impact is in our financing. As a bank, that’s how we can help transition to a greener economy with a smaller carbon footprint. ING has invested billions of euros in wind farms, solar energy and geothermal power production. ING has also decided to no longer finance new coal-fired power plants and coal mines. We have reduced our coal portfolio by 26 percent since the end of 2015 and will continue to reduce that portfolio going forward.
However, we can’t yet do without fossil fuels (as confirmed by IEA). There is still too little renewable energy, and experts haven’t yet been able to develop an efficient and affordable means of storing sustainable energy. But the need for transition is clear, and the ambitions are set. Equally important is the need for having a strong government policy on climate, including an effective price on carbon to articulate a risk that is not yet quantified. If carbon impact is priced in, it would be part of risk assessment. Ultimately, carbon pricing will shift behaviour and impact demand and supply.
It doesn’t stop here
ING will actively support the successful implementation of the TCFD recommendations and we encourage other businesses to do the same. However, we realise, as do the other signees, that climate-related financial disclosure is not all it takes to help implement the Paris Agreement. It needs to be complemented by a suite of mechanisms – including effective carbon pricing and the phase-out of fossil fuel subsidies – that further support a shift of investment to climate-smart activities and assets. All relevant players, including businesses, banks, governments and supervisors, will need to play their role. Our role will continue to be to support our clients’ sustainable transitions to contribute to meeting the Paris Agreement.